Temporary Migration and Bilateral Trade Flows

19 Pages Posted: 29 Apr 2009

See all articles by Marion Jansen

Marion Jansen

International Trade Centre

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division

Abstract

Empirical evidence on migration and trade has established that permanent migration promotes trade. This finding has been interpreted as proof for the role of migrants in reducing trade-related transaction costs such as contract enforcement costs or information costs. This paper contributes to improving our understanding of trade-related transaction costs by analysing empirically whether temporary migrants, like permanent migrants, have an impact on bilateral trade flows. Temporary migrants can be expected to be less integrated in the host country than permanent migrants. At the same time, their knowledge of the home country can, on average, be expected to be more up-to-date. Our findings therefore give insights as to the relative importance of knowledge on the host and the home country for trade-related transaction costs. Using a gravity approach in our empirical analysis, we find that temporary migration has a positive and significant effect on trade and that temporary migration tends to have a stronger and more significant effect on both imports and exports than permanent migration. Interestingly, the role of temporary migrants in reducing trade costs does not appear to be associated with their skills.

Suggested Citation

Jansen, Marion and Piermartini, Roberta, Temporary Migration and Bilateral Trade Flows. World Economy, Vol. 32, Issue 5, pp. 735-753, May 2009, Available at SSRN: https://ssrn.com/abstract=1396473 or http://dx.doi.org/10.1111/j.1467-9701.2009.01167.x

Marion Jansen (Contact Author)

International Trade Centre ( email )

54-56 Rue de Montbrillant
Geneva
Switzerland

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland
+41 22 739 5492 (Phone)
+41 22 739 5762 (Fax)

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